[Federal Register Volume 69, Number 35 (Monday, February 23, 2004)]
[Proposed Rules]
[Pages 8146-8148]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-3703]


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DEPARTMENT OF DEFENSE

48 CFR Parts 203, 209, and 252

[DFARS Case 2003-D012]


Defense Federal Acquisition Regulation Supplement; Improper 
Business Practices and Contractor Qualifications Relating to Debarment, 
Suspension, and Business Ethics

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to streamline and clarify text pertaining 
to debarment, suspension, and improper business practices. This 
proposed rule is a result of a transformation initiative undertaken by 
DoD to dramatically change the purpose and content of the DFARS.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before April 23, 2004, to be considered 
in the formation of the final rule.

ADDRESSES: Respondents may submit comments via the Internet at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. As an alternative, 
respondents may e-mail comments to: [email protected]. Please cite DFARS 
Case 2003-D012 in the subject line of e-mailed comments.
    Respondents that cannot submit comments using either of the above 
methods may submit comments to: Defense Acquisition Regulations 
Council, Attn: Mr. Euclides Barrera, OUSD (AT&L) DPAP (DAR), IMD 3C132, 
3062 Defense Pentagon, Washington, DC 20301-3062; facsimile (703) 602-
0350. Please cite DFARS Case 2003-D012.
    At the end of the comment period, interested parties may view 
public comments on the Internet at http://emissary.acq.osd.mil/dar/dfars.nsf.

FOR FURTHER INFORMATION CONTACT: Mr. Euclides Barrera, (703) 602-0296.

SUPPLEMENTARY INFORMATION:

A. Background

    DFARS Transformation is a major DoD initiative to dramatically 
change the purpose and content of the DFARS. The objective is to 
improve the efficiency and effectiveness of the acquisition process, 
while allowing the acquisition workforce the flexibility to innovate. 
The transformed DFARS will contain only requirements of law, DoD-wide 
policies, delegations of FAR authorities, deviations from FAR 
requirements, and policies/procedures that have a significant effect 
beyond the internal operating procedures of DoD or a significant cost 
or administrative impact on contractors or offerors. Additional 
information on the DFARS Transformation initiative is available at 
http://www.acq.osd.mil/dp/dars/transf.htm.
    This proposed rule is a result of the DFARS Transformation 
initiative. The proposed changes include--
     Consolidation of requirements for reporting 
violations and suspected violations of certain requirements into a new 
section at DFARS 203.070. This results in elimination of DFARS sections 
203.103, 203.103-2, and 203.104-10; subparts 203.2, 203.3, and 203.4; 
and sections 203.502 and 203.570-4.
     Streamlining of text at DFARS 203.570-1 and 
203.570-2 relating to prohibitions on persons convicted of fraud or 
other defense-contract-related felonies.
     Revision of the clause at 252.203-7001, 
Prohibition on Persons Convicted of Fraud or Other Defense-Contract-
Related Felonies, to remove unnecessary references to first-tier 
subcontracts in

[[Page 8147]]

paragraphs (b) and (d). Paragraph (g) of the clause adequately 
addresses requirements for flow down to first-tier subcontracts.
     Deletion of text at DFARS 203.570-3 relating to 
internal DoD procedures for waiver of the 5-year period for 
prohibitions on persons convicted of fraud or other defense-contract-
related felonies; and deletion of text at DFARS 209.105-2, 209.406-3, 
and 209.407-3 containing internal DoD procedures for referral of 
matters to agency debarment and suspension officials. This text will be 
relocated to the new DFARS companion resource, Procedures, Guidance, 
and Information (PGI). A proposed rule describing the purpose and 
structure of PGI is published elsewhere in this issue of the Federal 
Register under DFARS Case 2003-D090, Procedures, Guidance, and 
Information.
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    DoD does not expect this rule to have a significant economic impact 
on a substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule 
streamlines and clarifies existing regulations, with no substantive 
change in policy. Therefore, DoD has not performed an initial 
regulatory flexibility analysis. DoD invites comments from small 
businesses and other interested parties. DoD also will consider 
comments from small entities concerning the affected DFARS subparts in 
accordance with 5 U.S.C. 610. Such comments should be submitted 
separately and should cite DFARS Case 2003-D012.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the rule does 
not impose any information collection requirements that require the 
approval of the Office of Management and Budget under 44 U.S.C. 3501, 
et seq.

List of Subjects in 48 CFR Parts 203, 209, and 252

    Government procurement.

Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, DoD proposes to amend 48 CFR Parts 203, 209, and 252 as 
follows:
    1. The authority citation for 48 CFR Parts 203, 209, and 252 
continues to read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 203--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF 
INTEREST

    2. Section 203.070 is added to read as follows:


203.070  Reporting of violations and suspected violations.

    Report violations and suspected violations of the following 
requirements in accordance with 209.406-3 or 209.407-3 and DoDD 7075.5, 
Coordination of Remedies for Fraud and Corruption Related to 
Procurement Activities:

    (a) Certificate of Independent Price Determination (FAR 3.103).
    (b) Procurement integrity (FAR 3.104).
    (c) Gratuities clause (FAR Subpart 203.2).
    (d) Antitrust laws (FAR 3.303).
    (e) Covenant Against Contingent Fees (FAR 3.405).
    (f) Anti-kickback Act (FAR 3.502).
    (g) Prohibitions on persons convicted of defense-related contract 
felonies (203.570).


203.103, 203.103-2, and 203.104-10  [Removed]

    3. Sections 203.103, 203.103-2, and 203.104-10 are removed.

Subparts 203.2 through 203.4 [Removed]

    4. Subparts 203.2 through 203.4 are removed.


203.502  [Removed]

    5. Section 203.502 is removed.
    6. Sections 203.570-1 and 203.570-2 are revised to read as follows:


203.570-1   Scope.

    This subpart implements 10 U.S.C. 2408.


203.570-2   Prohibition period.

    DoD has sole responsibility for determining the period of the 
prohibition described in paragraph (b) of the clause at 252.203-7001, 
Prohibition on Persons Convicted of Fraud or Other Defense-Contract-
Related Felonies. The prohibition period--
    (a) Shall not be less than 5 years from the date of conviction 
unless the agency head or a designee grants a waiver in the interest of 
national security. Follow the waiver procedures at PGI 203.570-2(a); 
and
    (b) May be more than 5 years from the date of conviction if the 
agency head or a designee makes a written determination of the need for 
the longer period. The agency shall provide a copy of the determination 
to the address at PGI 203.570-2(b).


203.570-3 and 203.570-4   [Removed]

    7. Sections 203.570-3 and 203.570-4 are removed.


203.570-5  [Redesignated as 203.570-3]

    8. Section 203.570-5 is redesignated as 203.570-3.

PART 209--CONTRACTOR QUALIFICATIONS

    9. Section 209.105-2 is revised to read as follows:


209.105-2  Determinations and documentation.

    (a) For guidance on submission of determinations to the appropriate 
debarring and suspending official, see PGI 209.105-2(a).
    10. Section 209.406-3 is revised to read as follows:


209.406-3   Procedures.

    Refer all matters appropriate for consideration by an agency 
debarring and suspending official as soon as practicable to the 
appropriate debarring and suspending official identified in 209.403. 
Any person may refer a matter to the debarring and suspending official. 
Follow the procedures at PGI 209.406-3.
    11. Section 209.407-3 is revised to read as follows:


209.407-3   Procedures.

    Refer all matters appropriate for consideration by an agency 
debarring and suspending official as soon as practicable to the 
appropriate debarring and suspending official identified in 209.403. 
Any person may refer a matter to the debarring and suspending official. 
Follow the procedures at PGI 209.407-3.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    12. Section 252.203-7001 is amended by revising the introductory 
text, clause date, paragraph (b), paragraph (d) introductory text, and 
paragraph (h) to read as follows:


252.203-7001  Prohibition on Persons Convicted of Fraud or Other 
Defense-Contract-Related Felonies.

    As prescribed in 203.570-3, use the following clause:

Prohibition on Persons Convicted of Fraud or Other Defense-Contract-
Related Felonies (XXX 2004)

* * * * *
    (b) Any individual who is convicted after September 29, 1988, of 
fraud or any other felony arising out of a contract with the DoD is 
prohibited from serving--
    (1) In a management or supervisory capacity on this contract;

[[Page 8148]]

    (2) On the board of directors of the Contractor;
    (3) As a consultant, agent, or representative for the 
Contractor; or
    (4) In any other capacity with the authority to influence, 
advise, or control the decisions of the Contractor with regard to 
this contract.
* * * * *
    (d) 10 U.S.C. 2408 provides that the Contractor shall be subject 
to a criminal penalty of not more than $500,000 if convicted of 
knowingly--
* * * * *
    (h) Pursuant to 10 U.S.C. 2408(c), defense contractors and 
subcontractors may obtain information as to whether a particular 
person has been convicted of fraud or any other felony arising out 
of a contract with the DoD by contacting The Office of Justice 
Programs, The Denial of Federal Benefits Office, U.S. Department of 
Justice, telephone (301) 809-4904.
(End of clause)

[FR Doc. 04-3703 Filed 2-20-04; 8:45 am]
BILLING CODE 5001-08-P